Maximizing Profit of Supply Chain with Complementary Products using Game Theory

This paper describes about two-echelon supply chain model with two manufacturers and one common retailer. Two types of complementary products are produced by two manufacturers and the common retailer buys products separately using reservation prices and bundles them for sale. The demand of manufacturers and retailer are assumed as stochastic in nature. The profit of two manufacturers and retailer are maximized by using Stackelberg game policy. By applying game theoretical approach, several analytical solutions are obtained. An illustrative numerical example is derived and some managerial insights are given to illustrate the model.This research was supported by Basic Science Research Program through the National Research Foundation of Korea (NRF) funded by the Ministry of Education, Science and Technology (2014R1A1A2056338)